Correlation Between PT Wintermar and Webster Financial

Can any of the company-specific risk be diversified away by investing in both PT Wintermar and Webster Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PT Wintermar and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Wintermar Offshore and Webster Financial, you can compare the effects of market volatilities on PT Wintermar and Webster Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PT Wintermar with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Wintermar and Webster Financial.

Diversification Opportunities for PT Wintermar and Webster Financial

0.34

Correlation Coefficient

PT Wintermar  Webster Financial

Weak diversification

The 3 months correlation between W6O and Webster is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding PT Wintermar Offshore and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and PT Wintermar is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PT Wintermar Offshore are associated (or correlated) with Webster Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webster Financial has no effect on the direction of PT Wintermar i.e., PT Wintermar and Webster Financial go up and down completely randomly.

Pair Corralation between PT Wintermar and Webster Financial

Assuming the 90 days horizon PT Wintermar Offshore is expected to under-perform the Webster Financial. In addition to that, PT Wintermar is 5.2 times more volatile than Webster Financial. It trades about -0.02 of its total potential returns per unit of risk. Webster Financial is currently generating about -0.08 per unit of volatility. If you would invest  5,166  in Webster Financial on December 20, 2024 and sell it today you would lose (546.00) from holding Webster Financial or give up 10.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PT Wintermar Offshore  vs.  Webster Financial

PT Wintermar Offshore

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Wintermar Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Webster Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Webster Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PT Wintermar and Webster Financial

The main advantage of trading using opposite PT Wintermar and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Wintermar position performs unexpectedly, Webster Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Webster Financial will offset losses from the drop in Webster Financial's long position.

The idea behind PT Wintermar Offshore and Webster Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.